A forum for Ohio educators, sharing thoughts regarding their health care and pension system (STRS Ohio). Researcher John Curry manages a clearinghouse of related e-mails, articles, announcements, etc. His daily mailings include many items that do not make it to this blog. Contact John (curryfeezer@yahoo.com) if you wish to be on his e-mail list. Kathie Bracy: kbb47@aol.com.

Saturday, November 14, 2009

Dispatch: BWC, pension funds to benefit

From John Curry, November 14, 2009

After you read today's Dispatch article (below) pay particular attention to what the STRS spokesperson (Laura Ecklar) had to say...."We have a commitment to combat corporate fraud." Actually, Laura, our Ohio Attorney General has the "real" commitment to combat corporate fraud as...that is his job. After reading today's article please take a step back in time to 2008 when another corporate fraud was investigated by the Ohio Attorney General and that "combat" resulted in an out of court settlement (aren't they all?) with PricewaterhouseCoopers for 97.5 million dollars. So...what's my point?

Well.... my point is ....why are we still doing business with a company that we settled out of court with just last year? You don't think we are still doing business with PricewaterhouseCoopers? Well...read the attached document [see bottom of post] from a recent STRS board meeting that shows STRS plans to do $350,000 worth of business with PricewaterhouseCoopers during the 2009-2010 fiscal year. Why?

BWC, pension funds to benefit3 among plaintiffs in securities case settled for $400M

Saturday, November 14, 2009By Steve WartenbergTHE COLUMBUS DISPATCH

Two Ohio pension funds and the Ohio Bureau of Workers' Compensation will benefit from a $400 million settlement announced yesterday in a class-action lawsuit against Marsh & McLennan Co.

The company had been accused of securities-law violations.

"In layman's terms, Marsh received kickbacks from insurance companies in exchange for recommending that Marsh clients purchase policies with those carriers," Attorney General Richard Cordray said yesterday.

When news of these activities was made public, Cordray said, the company's stock plummeted and shareholders suffered significant losses.

The lead plaintiffs in the case included the State Teachers Retirement System of Ohio, Ohio Public Employees Retirement System and Ohio Bureau of Workers' Compensation, as well as the New Jersey Division of Investment.

The three Ohio organizations lost "tens of millions of dollars" through the purchase of stock in the New York-based company, Cordray said.

He added that there are thousands of plaintiffs across the country, and it is too soon to say how much of the $400 million the three Ohio entities will receive.

In a statement, Marsh & McLennan said: "While the company continues to deny all of the claims in these lawsuits, the resolution of these matters puts the litigation arising from the events of 2004 largely behind us and reduces the company's ongoing legal costs."

The settlement was good news for the three Ohio plaintiffs.

"We have a commitment to combat corporate fraud," said Laura Ecklar, spokeswoman for the State Teachers Retirement System fund.

"And when we can influence corporate governance in a good way for the protection of our members, that's something we appreciate doing with the attorney general and our sister systems."

Cordray said his office will continue to "hold Wall Street accountable for actions that harm our investors, retirees, workers and families."

The attorney general's office said the Marsh settlement brings the total it has recovered through securities lawsuits to more than $2 billion.

Marsh is a global professional-services company with about 52,000 employees and annual revenue of $11 billion.

Prominent international accounting firm PricewaterhouseCoopers has agreed to pay $97.5 million to settle its part in a securities class action filed against American International Group by three Ohio pension funds, according to a statement released on Friday by the Ohio attorney general's office. The settlement is one of the 10 highest ever paid by an accounting firm to settle a securities fraud class action.

"This important settlement represents a tremendous result for investors," Ohio Principal Assistant Attorney General Chris Geidner said in the statement. "We are pleased with this milestone and will continue to vigorously pursue investors' claims against the remaining defendants in the case."

The settlement closes the book on PwC's role in a suit filed against AIG in October 2004. In the suit, New York's Labaton Sucharow and Cleveland's Hahn Loeser & Parks served as co-lead plaintiffs counsel to the Ohio AG's office and three Columbus-based pension funds: the Ohio Public Employees Retirement System, the State Teachers Retirement System of Ohio, and the Ohio Police & Fire Pension Fund.

The three sought damages for shares purchased between October 1999 and April 2005. AIG was forced to restate earnings by nearly $4 billion in 2005 after former New York State Attorney General Eliot Spitzer and the SEC commenced investigations into charges of accounting irregularities, bid-rigging, and improper workers' compensation funds allegedly occurring at the insurance giant.

The investigations led to the ouster of former AIG chairman and CEO Maurice "Hank" Greenberg, as well as several other senior company executives. A spate of class action suits were filed in late 2004 and 2005 against AIG, its reinsurers, Greenberg and numerous former AIG directors and officers. (AIG paid $1.6 billion in February 2006 as part of a global settlement for all state and federal civil actions.)

Represented by Labaton senior partner Thomas Dubbs and Hahn Loeser partner Alan Kopit, plaintiffs alleged that PwC had violated securities laws in connection with its audits of AIG's financial statements during the years at issue. (Dubbs was unavailable for comment and the Hahn Loeser firm declined a request for comment.)

"We have decided to settle the case at this stage to avoid the enormous litigation costs that would be incurred if the case continued against the firm, while at the same time eliminating any potential exposure," said a PwC spokeswoman in a statement to The Am Law Daily. "The settlement does not contain an admission of wrongdoing by the firm, and we continue to believe that our work was in accordance with professional standards."

Daniel Kramer, co-chair of the securities litigation and enforcement group at New York's Paul, Weiss, Rifkind, Wharton & Garrison, continues to represent AIG in various civil actions.

The PwC settlement must be approved by U.S. District Court Judge John Sprizzo in Manhattan. PwC continues to serve as AIG's independent auditor.Click image to enlarge..........................................................

About Me

A graduate of the Oberlin Conservatory of Music and the Baylor University School of Music, I am a professional symphony musician by background. I am also a retired elementary classroom teacher (nonmusic), having taught in the Alliance (OH) City Schools 2-1/2 years and the Columbus Public Schools 30 years. My first job was as harp instructor at The University of Texas; currently I am a Lecturer in Harp at The University of Mount Union. As a retired educator and a life member of a number of professional organizations, including the Ohio Retired Teachers Association and the Ohio Education Association-Retired, I also worked through CORE (Concerned Ohio Retired Educators, which officially disbanded 9/20/12) to help bring about badly needed reform in our teachers retirement system, STRS Ohio. My e-mail: kbb47@aol.com.